David O'Sullivan, O'Sullivan Architects

Spring forward! What do you think about spring? It has been a mild winter and the construction activity never seemed to slow down so the transition to spring is not a huge change this year. The main focus in the news is the presidential primaries and the strange happens on that front but in the real estate industry the news is all about rising prices. The prices recorded for some recent sales, both the larger commercial transactions as well as home prices, show a strong demand in our area. The value is there today but some speculate we cannot sustain these levels.

You can look at a variety of factors that contribute to the strong real estate market. According to the Fed, family finances which peaked in the third quarter of 2008, have almost returned to that level. They report that household net worth is now at a record $86.8 trillion and that shows household balance sheets are looking good and is money out there to acquire and invest in real estate.

When you look are several factors related to the building industry, similar to what the Federal Reserve Bank of Atlanta did with their Housing Market Recovery Spider Graph, it looked at factors such as job growth, consumer confidence index, housing permits and starts, existing home sales median household income and unemployment and compares years 2007-2015. Most of those factors point to improvement in areas of demand and absorption. It also exposes some issues on constraints such as limited supply. This is just what we see in our local area. There are signs of some segments of economy not increasing the way it was hoped and that is reflected in the Fed decision to not raise short term interest rates.

We all know every market is local but today the world economy also plays a role everywhere. In Boston, with its diverse economic base, its large percentage of foreign investment and buyers, we have to look beyond the local factors when analyzing a development for success. The city of Boston as well as adjacent Somerville, Quincy and Cambridge are all adding population as well as office/retail space which is fueling demand for developments.

David O’Sullivan, AIA, is the president of O’Sullivan Architects, Inc., Reading, Mass.